Think you can't afford to pay cash for a car? Think again. It really isn't that hard with a little bit of effort. My husband and I both had paid for cars when we got married. They weren't necessarily nice cars, but they worked. Until one day my car left me stranded on the side of the road in rural Michigan. We found out that it would cost $6000 to fix my car that was only worth $3000. So, we got a new to us van on a loan.
I very quickly started hating our van and loan. The van only ran about half the time, but with making our car payments every month we didn't exactly have the extra money to get things fixed. The drivers side window didn't roll down, the radio didn't work and I felt like something always needed to be repaired. I decided this was a position that I didn't ever want to be in again.
We decided that from there on out we were going to pay cash for cars and for the most part have stuck with it. We occasionally get a loan for a car before we have sold our old cars and then pay it off after selling our cars. You don't have to have a lot of money to be able to pay cash for cars. We have bought cars paying cash when we were making as little as $40,000 a year. Check out these tips for how to pay cash for your next car.
- If you currently have a car payment try to pay a little extra each month on it. It could be something as small as an extra $10. Every little bit helps. Even though I stayed at home I was able to make a little money on the side. We would take the extra money I made and put it toward the van loan. We were able to pay off the loan in about 2 years instead of 5. Have a tax return or bonus coming? Put the money toward your car payment.
- Start making payments to yourself when the loan is paid off. When the loan was paid off I would have loved to have bought a new van and ditched our old one. But, we kept driving the van for another couple of years. We didn't stop making the "van payments" either. Every month we put the payment amount in a separate bank account for a new car. We weren't really thinking about the $200 a month we were putting in the bank. Two years later my husband's truck broke down and we had $5000 saved up for a car.
- Buy what you can afford. It's so easy when you are buying a house or car to purchase a little higher than what you were intending. We have done it multiple times with our house. The payments only change by $10 or $20 dollars a month so it doesn't seem like a big deal. When you are paying cash, you need to stick to what you can afford. My husband would have loved to buy a new truck, but instead, we found a great deal on a sedan. With the money we had saved, the money we got selling his truck, and a little extra money from my side hustles we were able to pay $6800 for a used sedan. It was in good shape, had less than 50,000 miles, and we were able to drive it for 5 years. It may not be your dream car, but if you can come up with at least $4000 you can probably find a car that will work for you.
Once you start buying cars with cash it gets so much easier. From there you can just save your car payment every month. Our $200 a month allows us to spend around $15,000 for cars every 5 years. With a little bit of planning and extra saving, you too can find yourself paying cash for your next car.